Dollar stands tall in big week for FX markets
The dollar consolidated gains on Monday after posting its biggest weekly rise in six weeks as traders cut their bearish bets before a much-anticipated Federal Reserve meeting that might signal a change in the outlook for U.S. monetary policy.
The U.S. central bank begins a scheduled two-day policy meeting on Tuesday. Recent data pointing to a surge in inflation has raised concerns that price pressures following the post-COVID economic reopening could force policymakers into an earlier tapering of currency-depreciating stimulus.
While consensus expectations are the Fed will remain on hold until 2023, some believe the failure of the dollar to weaken in recent days despite inflation-adjusted U.S. bond yields softening further signals a broader caution among investors.
“Market participants are wary of…June 14, 2021